EX-99.1 2 ex-99d1.htm EX-99.1 shbi_Ex99_1

Picture 2

 

28969 Information Lane

Easton,  Maryland 21601 

Phone 410-763-7800

 

PRESS RELEASE

 

Shore Bancshares Reports Third Quarter and Nine-Month Results

 

Easton, Maryland (10/24/19) - Shore Bancshares, Inc. (NASDAQ - SHBI) (the “Company”) reported net income of $4.206 million or $0.33 per diluted common share for the third quarter of 2019, compared to net income of $4.224 million or $0.33 per diluted common share for the second quarter of 2019, and net income of $4.454 million or $0.35 per diluted common share for the third quarter of 2018.  Net income from continuing operations for the third quarter of 2019 was $4.214 million or $0.33 per diluted common share, compared to net income from continuing operations of $4.228 million or $0.33 per diluted common share for the second quarter of 2019, and net income from continuing operations of $4.256 million or $0.33 per diluted common share for the third quarter of 2018. The Company reported net income of $12.184 million or $0.95 per diluted common share for the first nine months of 2019, compared to net income of $12.903 million or $1.01 per diluted common share for the first nine months of 2018. Net income from continuing operations for the first nine months of 2019 was $12.270 million or $0.96 per diluted common share, compared to net income from continuing operations of $11.910 million or $0.93 per diluted common share for the first nine months of 2018.

 

When comparing net income from continuing operations for the third quarter of 2019 to the second quarter of 2019, net interest income increased $387 thousand,  offset by an increase in noninterest expenses of $399 thousand. When comparing net income from continuing operations for the third quarter of 2019 to the third quarter of 2018, the decrease was due to lower net interest income of $267 thousand and higher noninterest expenses of $74 thousand, offset by a lower provision for credit losses of $107 thousand and higher noninterest income of $64 thousand. 

 

“During the third quarter we experienced significant growth in deposits resulting in stable earnings for the quarter,” said Lloyd L. “Scott” Beatty, Jr., President and Chief Executive Officer.  “Our loan demand remains strong and the lack of growth in the third quarter was partially a result of deals being delayed into the fourth quarter, coupled with some significant payoffs. During the third quarter, the Company began repurchasing its shares under the stock repurchase plan approved in April of 2019. As of September 30, 2019, the Company had repurchased 36,700 shares for approximately $558 thousand.  As we move forward into the last quarter of the year, we remain focused on continuing to grow our loan portfolio, repurchasing shares and increasing our market share within our footprint.”  

 

Balance Sheet Review

Total assets were $1.562 billion at September 30, 2019, a $78.6 million, or 5.3%, increase when compared to $1.483 billion at the end of 2018.  The increase was primarily due to total deposits increasing $113.1 million or 9.3%.  The significant growth in deposits funded increases in loans of $39.7 million, or 3.3%, interest-bearing deposits with other banks of $29.7 million, or 58.2%, and other assets of $12.9 million, or 72.9%, which includes the purchase of approximately $14 million of bank owned life insurance (“BOLI”) during the third quarter of 2019.  In addition, the increase in deposits allowed the Company to decrease its short-term borrowings by $43.5 million or 71.6%.  

 

Total deposits increased $113.1 million, or 9.3%, when compared to December 31, 2018.  The increase in total deposits primarily consisted of increases in interest-bearing checking deposits of $48.7 million, noninterest-bearing deposits of $32.1 million, time deposits greater than $100 thousand of $25.2 million, other time deposits of $8.8 million and savings and money market accounts of $8.3 million, partially offset by a decrease in brokered deposits of $10.0 million.    

 

Page 2 of 17

Total stockholders’ equity increased $10.8 million, or 5.9%, when compared to the end of 2018. At September 30, 2019, the ratio of total equity to total assets was 12.42% and the ratio of total tangible equity to total tangible assets was 11.29%.

 

Total assets at September 30, 2019 increased $88.1 million, or 6.0%, when compared to total assets at September 30, 2018.  The primary reason for the increase was due to total deposits increasing $143.7 million or 12.2%.  The significant growth in deposits funded increases in loans of $54.5 million or 4.6%, interest-bearing deposits with other banks of $50.7 million or 169.4% and other assets of $15.4 million or 102.0%, partially offset by a decrease in investment securities available for sale of $28.8 million or 17.2%. In addition, the increase in deposits allowed the Company to decrease its short-term borrowings by $96.8 million or 84.9%.

 

Total deposits at September 30, 2019 increased $143.7 million, or 12.2%, when compared to September 30, 2018.  The increase in total deposits primarily consisted of increases in interest-bearing checking deposits of $73.6 million, noninterest-bearing deposits of $30.8 million, time deposits greater than $100 thousand of $26.6 million, savings and money market accounts of $19.2 million, and other time deposits of $4.8 million partially offset by a decrease in brokered deposits of $11.5 million.  Total stockholders’ equity increased $22.5 million, or 13.2%, when compared to September 30, 2018. 

 

Review of Quarterly Financial Results

Net interest income was $12.7 million for the third quarter of 2019, compared to $12.3 million for the second quarter of 2019 and $12.9 million for the third quarter of 2018. The primary reasons for the increase in net interest income when compared to the second quarter of 2019 were loan growth late in the second quarter allowing a full quarter of earning interest, coupled with an extra day of earning interest on legacy loans as well as an increase in interest-bearing deposits with other banks of $59.8 million.  Interest on deposits increased $84 thousand and was partially offset by a decrease in interest on short-term borrowings of $28 thousand when comparing the third quarter of 2019 to the second quarter of 2019. Net interest income decreased when compared to the third quarter of 2018 due to an increase in interest expense of $1.2 million, partially offset by an increase in interest income of $957 thousand. The improvement in interest income was the result of increases in the average balances of loans of $60.9 million or 5.2% and interest-bearing deposits with other banks of $24.1 million or 137.6%. The Company’s net interest margin decreased to 3.52% from 3.54% in the second quarter of 2019 and decreased from 3.76% in the third quarter of 2018.  The decline in net interest margin from the second quarter of 2019 was due to a higher average balance in interest-bearing deposits with other banks, which experienced a decrease in yield of 34bps. The decline in net interest margin from the third quarter of 2018 was due to an increase in rates paid on all interest-bearing liabilities, most significantly interest-bearing deposits which experienced an increase in the average balance of $61.7 million and rates paid on these deposits of 62bps, partially offset by an increase in the average balance of total earnings assets $61.7 million and a yield of 9bps. 

 

The provision for credit losses was $200 thousand for the three months ended September 30, 2019.  The comparable amounts were $200 thousand and $307 thousand for the three months ended June  30, 2019 and September 30, 2018, respectively. The provision for credit losses remained unchanged from the second quarter of 2019 due to stagnant growth within the loan portfolio.  The decrease in the amount of provision for credit losses from the third quarter of 2018 was due to lower loan growth in the third quarter of 2019. Net charge-offs were $67 thousand for the third quarter of 2019, $313 thousand for the second quarter of 2019 and $100 thousand for the third quarter of 2018.  The ratio of annualized net charge-offs to average loans was 0.02% for the third quarter of 2019, 0.10% for the second quarter of 2019 and 0.03% for the third quarter of 2018.  The ratio of the allowance for credit losses to period-end loans was 0.85% at September 30, 2019, slightly higher than the 0.83% at June  30, 2019 and lower than the 0.87% at September 30, 2018. 

 

At September 30, 2019, nonperforming assets were $13.3 million, a decrease of $2.2 million, or 14.4%, when compared to June  30, 2019, primarily due to a decrease in nonaccrual loans of  $2.1, or 14.1%. Other real estate owned decreased $450 thousand, or 85.9% and accruing troubled debt restructurings (“TDRs”) decreased $180 thousand, or 2.3% over the same time period. When comparing September 30, 2019 to September 30, 2018, nonperforming assets increased $4.4 million, or 49.9%, and accruing TDRs decreased $1.3 million, or 15.1%. The increase in nonperforming assets was due to a large nonaccrual loan with an outstanding loan balance of $7.5 million added late in the fourth quarter of 2018, in which the Company does not anticipate any further losses. The ratio of nonperforming assets and accruing TDRs to total assets was 1.34%, 1.56% and 1.21% at September 30, 2019, June  30, 2019 and September 30, 2018, respectively.  In addition, the ratio of accruing TDRs to total loans at September 30, 2019 was 0.61% at September 30, 2019, compared to 0.63% at June  30, 2019 and 0.76% at September 30, 2018.

 

Page 3 of 17

Total noninterest income from continuing operations for the third quarter of 2019 decreased $80 thousand when compared to the second quarter of 2019 and increased $64 thousand when compared to the third quarter of 2018.  The decrease from the second quarter of 2019 was the result of a decrease in service charges on deposit accounts and additional fees on bank service charges included in other noninterest income.  The increase from the third quarter of 2018 was due to higher loan fees and additional fees on bank service charges. 

 

Total noninterest expense from continuing operations for the third quarter of 2019 increased $399 thousand when compared to the second quarter of 2019 and increased $74 thousand when compared to the third quarter of 2018.  The increase in noninterest expense compared to the second quarter of 2019 was primarily due to higher employee benefits, which included the funding of a  new supplemental executive retirement plan, a write down on an other real estate owned property and other loan expenses, partially offset by lower FDIC insurance premiums for the quarter due to an FDIC assessment credit for banks under $10 billion. The slight increase in noninterest expenses from the third quarter of 2018 was primarily due to increases in employee benefits and other loan and service costs, almost entirely offset by lower salaries and wages, amortization on intangible assets and FDIC insurance premiums.    

 

Review of Nine-Month Financial Results

Net interest income for the first nine months of 2019 was $37.4 million, a decrease of $542 thousand, or 1.4%, when compared to the first nine months of 2018.  The decrease was the direct result of an increase in interest expense on deposits, which was partially offset by an increase in interest and fees on loans. The average balance on loans increased $78.7 million and the yield on loans increased 10bps when comparing the periods.  This increase in volume and yields on loans was offset by an increase in the average balance of interest-bearing deposits of $49.7 million, with an associated increase in rates paid on these deposits of 66bps. This resulted in a net interest margin of 3.56% for the first nine months of 2019 compared to 3.79% for the first nine months of 2018.   

 

The provision for credit losses for the nine months ended September 30, 2019 and 2018 was $500 thousand and $1.2 million, respectively, while net charge-offs were $405 thousand and $667 thousand, respectively. The decrease in provision for credit losses was the result of improved overall credit quality exclusive of the one large relationship mentioned above and lower net charge-offs for the first nine months of 2019 compared to the first nine months of 2018.  In addition, loan growth in the first nine months of 2019 has lagged the first nine months of 2018. The ratio of annualized net charge-offs to average loans was 0.04% for the first nine months of 2019 and 0.08% for the first nine months of 2018.

 

Total noninterest income from continuing operations for the nine months ended September 30, 2019  increased $426 thousand, or 6.2%, when compared to the same period in 2018. The increase in noninterest income primarily consisted of increases in service charges on deposit accounts and other fees on bank services.    

 

Total noninterest expense from continuing operations for the nine months ended September 30, 2019 increased $98 thousand, or 0.4%, when compared to the same period in 2018. Despite the insignificant aggregate increase in total noninterest expenses, salaries and wages decreased $1.1 million and FDIC insurance premiums decreased $226 thousand, which were offset by increases in employee benefits of $417 thousand, data processing of $314 thousand, legal and professional fees of $277 thousand and other real estate owned expenses of $301 thousand.    

 

Shore Bancshares Information

 

Shore Bancshares is a financial holding company headquartered in Easton, Maryland and is the largest independent bank holding company located on Maryland’s Eastern Shore. It is the parent company of Shore United Bank. Shore Bancshares engages in trust and wealth management services through Wye Financial & Trust, a division of Shore United Bank.  Additional information is available at www.shorebancshares.com.

 

Forward-Looking Statements

 

The statements contained herein that are not historical facts are forward-looking statements (as defined by the Private Securities Litigation Reform Act of 1995) based on management’s current expectations and beliefs concerning future developments and their potential effects on the Company. Such statements involve inherent risks and uncertainties, many of which are difficult to predict and are generally beyond the control of the Company. There can be no assurance that future developments affecting the Company will be the same as those anticipated by management. These statements are evidenced by terms such as “anticipate,” “estimate,” “should,” “expect,” “believe,” “intend,” and similar expressions.

Page 4 of 17

Although these statements reflect management’s good faith beliefs and projections, they are not guarantees of future performance and they may not prove true. These projections involve risk and uncertainties that could cause actual results to differ materially from those addressed in the forward-looking statements. For a discussion of these risks and uncertainties, see the section of the periodic reports filed by Shore Bancshares, Inc. with the Securities and Exchange Commission entitled “Risk Factors”.

The Company specifically disclaims any obligation to update any factors or to publicly announce the result of revisions to any of the forward-looking statements included herein to reflect future events or developments.

For further information contact:  Edward Allen, Executive Vice President and Chief Financial Officer,

410-763-7800

Page 5 of 17

Shore Bancshares, Inc.

Financial Highlights

(Dollars in thousands, except per share data)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the Three Months Ended

 

For the Nine Months Ended

 

 

 

September 30, 

 

September 30, 

 

 

    

2019

    

2018

    

Change

    

2019

    

2018

    

Change

 

PROFITABILITY FOR THE PERIOD

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net interest income

 

$

12,680

 

$

12,947

 

(2.1)

%

$

37,367

 

$

37,909

 

(1.4)

%

Provision for credit losses

 

 

200

 

 

307

 

(34.9)

 

 

500

 

 

1,214

 

(58.8)

 

Noninterest income

 

 

2,529

 

 

2,465

 

2.6

 

 

7,326

 

 

6,901

 

6.2

 

Noninterest expense

 

 

9,384

 

 

9,310

 

0.8

 

 

27,712

 

 

27,615

 

0.4

 

Income from continuing operations before income taxes

 

 

5,625

 

 

5,795

 

(2.9)

 

 

16,481

 

 

15,981

 

3.1

 

Income tax expense

 

 

1,411

 

 

1,539

 

(8.3)

 

 

4,211

 

 

4,071

 

3.4

 

Income from continuing operations 

 

$

4,214

 

$

4,256

 

(1.0)

 

$

12,270

 

$

11,910

 

3.0

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(Loss) Income from discontinued operations before income taxes

 

 

(10)

 

 
269

 

(103.7)

 

 

(113)

 

 
1,317

 

(108.6)

 

Income tax expense (benefit)

 

 

(2)

 

 
71

 

(102.8)

 

 

(27)

 

 
324

 

(108.3)

 

(Loss) Income from discontinued operations 

 

 

(8)

 

 
198

 

(104.0)

 

 

(86)

 

 
993

 

(108.7)

 

Net income

 

$

4,206

 

$
4,454

 

(5.6)

 

$

12,184

 

$
12,903

 

(5.6)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

From Continuing Operations:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Return on average assets

 

 

1.10

%

 

1.16

%

(6)

bp

 

1.11

%

 

1.12

%

(1)

bp

Return on average equity

 

 

8.66

 

 

9.92

 

(126)

 

 

8.68

 

 

9.52

 

(84)

 

Return on average tangible equity (1)

 

 

9.90

 

 

12.77

 

(287)

 

 

9.98

 

 

12.26

 

(228)

 

Net interest margin

 

 

3.52

 

 

3.76

 

(24)

 

 

3.56

 

 

3.79

 

(23)

 

Efficiency ratio - GAAP

 

 

61.70

 

 

60.41

 

129

 

 

62.01

 

 

61.63

 

38

 

Efficiency ratio - Non-GAAP (1)

 

 

60.58

 

 

58.55

 

203

 

 

60.81

 

 

60.11

 

70

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

PER SHARE DATA

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic net income per common share

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income from continuing operations

 

$

0.33

 

$

0.33

 

 —

%

$

0.96

 

$

0.93

 

3.2

%

(Loss) Income from discontinued operations

 

 

 —

 

 

0.02

 

(100.0)

 

 

(0.01)

 

 

0.08

 

(112.5)

 

Net income

 

$

0.33

 

$

0.35

 

(5.7)

 

$

0.95

 

$

1.01

 

(5.9)

 

Diluted net income per common share

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income from continuing operations

 

$

0.33

 

$

0.33

 

 —

 

$

0.96

 

$

0.93

 

3.2

 

(Loss) Income from discontinued operations

 

 

 —

 

 

0.02

 

(100.0)

 

 

(0.01)

 

 

0.08

 

(112.5)

 

Net income

 

$

0.33

 

$

0.35

 

(5.7)

 

$

0.95

 

$

1.01

 

(5.9)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Dividends paid per common share

 

 

0.10

 

 

0.08

 

25.0

 

 

0.30

 

 

0.23

 

30.4

 

Book value per common share at period end

 

 

15.22

 

 

13.45

 

13.2

 

 

 

 

 

 

 

 

 

Tangible book value per common share at period end (1)

 

 

13.66

 

 

10.96

 

24.6

 

 

 

 

 

 

 

 

 

Market value at period end

 

 

15.41

 

 

17.82

 

(13.5)

 

 

 

 

 

 

 

 

 

Market range:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

High

 

 

17.00

 

 

19.84

 

(14.3)

 

 

17.00

 

 

20.09

 

(15.4)

 

Low

 

 

14.90

 

 

16.63

 

(10.4)

 

 

14.00

 

 

16.28

 

(14.0)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

AVERAGE BALANCE SHEET DATA

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loans

 

$

1,235,374

 

$

1,174,513

 

5.2

%

$

1,219,623

 

$

1,140,925

 

6.9

%

Investment securities

 

 

155,324

 

 

178,572

 

(13.0)

 

 

160,035

 

 

186,936

 

(14.4)

 

Earning assets

 

 

1,432,252

 

 

1,370,573

 

4.5

 

 

1,408,937

 

 

1,341,403

 

5.0

 

Assets

 

 

1,513,790

 

 

1,457,074

 

3.9

 

 

1,480,813

 

 

1,426,504

 

3.8

 

Deposits

 

 

1,280,057

 

 

1,192,845

 

7.3

 

 

1,243,472

 

 

1,174,505

 

5.9

 

Stockholders' equity

 

 

193,120

 

 

170,299

 

13.4

 

 

189,094

 

 

167,288

 

13.0

 

Page 6 of 17

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

CREDIT QUALITY DATA

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net charge-offs

 

$

67

 

$

100

 

(33.0)

%

$

405

 

$

667

 

(39.3)

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Nonaccrual loans

 

$

12,530

 

$

7,362

 

70.2

 

 

 

 

 

 

 

 

 

Loans 90 days past due and still accruing

 

 

712

 

 

 3

 

23,633.3

 

 

 

 

 

 

 

 

 

Other real estate owned

 

 

74

 

 

1,518

 

(95.1)

 

 

 

 

 

 

 

 

 

Total nonperforming assets

 

 

13,316

 

 

8,883

 

49.9

 

 

 

 

 

 

 

 

 

Accruing troubled debt restructurings (TDRs)

 

 

7,588

 

 

8,933

 

(15.1)

 

 

 

 

 

 

 

 

 

Total nonperforming assets and accruing TDRs

 

$

20,904

 

$

17,816

 

17.3

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

CAPITAL AND CREDIT QUALITY RATIOS

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Period-end equity to assets

 

 

12.42

%

 

11.63

%

79

bp

 

 

 

 

 

 

 

 

Period-end tangible equity to tangible assets (1)

 

 

11.29

 

 

9.69

 

160

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Annualized net charge-offs to average loans

 

 

0.02

 

 

0.03

 

(1)

 

 

0.04

%

 

0.08

%

(4)

bp

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Allowance for credit losses as a percent of:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Period-end loans

 

 

0.85

 

 

0.87

 

(2)

 

 

 

 

 

 

 

 

 

Nonaccrual loans

 

 

83.30

 

 

140.29

 

(5,699)

 

 

 

 

 

 

 

 

 

Nonperforming assets

 

 

78.39

 

 

116.27

 

(3,788)

 

 

 

 

 

 

 

 

 

Accruing TDRs

 

 

137.56

 

 

115.62

 

2,194

 

 

 

 

 

 

 

 

 

Nonperforming assets and accruing TDRs

 

 

49.93

 

 

57.97

 

(804)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

As a percent of total loans:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Nonaccrual loans

 

 

1.01

 

 

0.62

 

39

 

 

 

 

 

 

 

 

 

Accruing TDRs

 

 

0.61

 

 

0.76

 

(15)

 

 

 

 

 

 

 

 

 

Nonaccrual loans and accruing TDRs

 

 

1.63

 

 

1.38

 

25

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

As a percent of total loans+other real estate owned:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Nonperforming assets

 

 

1.08

 

 

0.75

 

33

 

 

 

 

 

 

 

 

 

Nonperforming assets and accruing TDRs

 

 

1.69

 

 

1.51

 

18

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

As a percent of total assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Nonaccrual loans

 

 

0.80

 

 

0.50

 

30

 

 

 

 

 

 

 

 

 

Nonperforming assets

 

 

0.85

 

 

0.60

 

25

 

 

 

 

 

 

 

 

 

Accruing TDRs

 

 

0.49

 

 

0.61

 

(12)

 

 

 

 

 

 

 

 

 

Nonperforming assets and accruing TDRs

 

 

1.34

 

 

1.21

 

13

 

 

 

 

 

 

 

 

 

(1)

See the reconciliation table on page 17 of 17.

Page 7 of 17

Shore Bancshares, Inc.

Consolidated Balance Sheets

(In thousands, except per share data)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

September 30, 2019

 

 

 

 

September 30, 

 

 

December 31, 

 

September 30, 

 

compared to

 

 

    

2019

    

2018

    

2018

 

December 31, 2018

 

ASSETS

 

 

 

 

 

 

 

 

 

 

 

 

Cash and due from banks

 

$

22,777

 

$

16,294

 

$

18,859

 

39.8

%

Interest-bearing deposits with other banks

 

 

80,596

 

 

50,931

 

 

29,918

 

58.2

 

Cash and cash equivalents

 

 

103,373

 

 

67,225

 

 

48,777

 

53.8

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Investment securities available for sale (at fair value)

 

 

138,911

 

 

154,432

 

 

167,675

 

(10.1)

 

Investment securities held to maturity

 

 

9,780

 

 

6,043

 

 

6,037

 

61.8

 

Equity securities, at fair value

 

 

1,339

 

 

1,269

 

 

649

 

5.5

 

Restricted securities

 

 

4,655

 

 

6,476

 

 

8,110

 

(28.1)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loans

 

 

1,235,035

 

 

1,195,355

 

 

1,180,557

 

3.3

 

Less: allowance for credit losses

 

 

(10,438)

 

 

(10,343)

 

 

(10,328)

 

0.9

 

Loans, net

 

 

1,224,597

 

 

1,185,012

 

 

1,170,229

 

3.3

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Premises and equipment, net

 

 

23,871

 

 

22,711

 

 

22,866

 

5.1

 

Goodwill

 

 

17,518

 

 

17,518

 

 

17,518

 

 —

 

Other intangible assets, net

 

 

2,396

 

 

2,857

 

 

4,088

 

(16.1)

 

Other real estate owned, net

 

 

74

 

 

1,222

 

 

1,518

 

(93.9)

 

Right of use assets, net

 

 

4,908

 

 

 —

 

 

 —

 

 —

 

Other assets

 

 

30,257

 

 

17,678

 

 

15,129

 

71.2

 

Assets of discontinued operations

 

 

 —

 

 

633

 

 

10,947

 

(100.0)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total assets

 

$

1,561,679

 

$

1,483,076

 

$

1,473,543

 

5.3

 

 

 

 

 

 

 

 

 

 

 

 

 

 

LIABILITIES

 

 

 

 

 

 

 

 

 

 

 

 

Noninterest-bearing deposits

 

$

362,557

 

$

330,466

 

$

331,766

 

9.7

 

Interest-bearing deposits

 

 

962,934

 

 

881,875

 

 

850,070

 

9.2

 

Total deposits

 

 

1,325,491

 

 

1,212,341

 

 

1,181,836

 

9.3

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Short-term borrowings

 

 

17,263

 

 

60,812

 

 

114,043

 

(71.6)

 

Long-term borrowings

 

 

15,000

 

 

15,000

 

 

 —

 

 —

 

Lease liabilities

 

 

4,923

 

 

 —

 

 

 —

 

 —

 

Accrued expenses and other liabilities

 

 

5,039

 

 

8,415

 

 

5,893

 

(40.1)

 

Liabilities of discontinued operations

 

 

 —

 

 

3,323

 

 

352

 

(100.0)

 

Total liabilities

 

 

1,367,716

 

 

1,299,891

 

 

1,302,124

 

5.2

 

 

 

 

 

 

 

 

 

 

 

 

 

 

COMMITMENTS AND CONTINGENCIES

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

STOCKHOLDERS' EQUITY

 

 

 

 

 

 

 

 

 

 

 

 

Common stock, par value $0.01; authorized 35,000,000 shares

 

 

127

 

 

127

 

 

127

 

 —

 

Additional paid in capital

 

 

64,879

 

 

65,434

 

 

65,730

 

(0.8)

 

Retained earnings

 

 

128,924

 

 

120,574

 

 

109,628

 

6.9

 

Accumulated other comprehensive (loss)

 

 

33

 

 

(2,950)

 

 

(4,066)

 

101.1

 

Total stockholders' equity

 

 

193,963

 

 

183,185

 

 

171,419

 

5.9

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total liabilities and stockholders' equity

 

$

1,561,679

 

$

1,483,076

 

$

1,473,543

 

5.3

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Period-end common shares outstanding

 

 

12,742

 

 

12,749

 

 

12,748

 

(0.1)

 

Book value per common share

 

$

15.22

 

$

14.37

 

$

13.45

 

5.9

 

 

 

 

 

Page 8 of 17

Shore Bancshares, Inc.

Consolidated Statements of Income

(In thousands, except per share data)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the Three Months Ended

 

 

For the Nine Months Ended

 

 

 

September 30, 

 

September 30, 

 

 

    

2019

    

2018

    

% Change

    

2019

    

2018

    

% Change

 

INTEREST INCOME

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest and fees on loans

 

$

14,100

 

$

13,205

 

6.8

%

$

41,348

 

$

37,880

 

9.2

%

Interest on investment securities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Taxable

 

 

870

 

 

947

 

(8.1)

 

 

2,755

 

 

2,950

 

(6.6)

 

Interest on deposits with other banks

 

 

223

 

 

84

 

165.5

 

 

499

 

 

183

 

172.7

 

Total interest income

 

 

15,193

 

 

14,236

 

6.7

 

 

44,602

 

 

41,013

 

8.8

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

INTEREST EXPENSE

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest on deposits

 

 

2,288

 

 

826

 

177.0

 

 

6,439

 

 

1,954

 

229.5

 

Interest on short-term borrowings

 

 

117

 

 

463

 

(74.7)

 

 

475

 

 

1,150

 

(58.7)

 

Interest on long-term borrowings

 

 

108

 

 

 —

 

 —

 

 

321

 

 

 —

 

 —

 

Total interest expense

 

 

2,513

 

 

1,289

 

95.0

 

 

7,235

 

 

3,104

 

133.1

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

NET INTEREST INCOME

 

 

12,680

 

 

12,947

 

(2.1)

 

 

37,367

 

 

37,909

 

(1.4)

 

Provision for credit losses

 

 

200

 

 

307

 

(34.9)

 

 

500

 

 

1,214

 

(58.8)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

NET INTEREST INCOME AFTER PROVISION

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

FOR CREDIT LOSSES

 

 

12,480

 

 

12,640

 

(1.3)

 

 

36,867

 

 

36,695

 

0.5

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

NONINTEREST INCOME

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Service charges on deposit accounts

 

 

990

 

 

982

 

0.8

 

 

2,952

 

 

2,834

 

4.2

 

Trust and investment fee income

 

 

383

 

 

383

 

 —

 

 

1,140

 

 

1,197

 

(4.8)

 

Other noninterest income

 

 

1,156

 

 

1,100

 

5.1

 

 

3,234

 

 

2,870

 

12.7

 

Total noninterest income

 

 

2,529

 

 

2,465

 

2.6

 

 

7,326

 

 

6,901

 

6.2

 

 

Page 9 of 17

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

NONINTEREST EXPENSE

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Salaries and wages

 

 

3,853

 

 

4,209

 

(8.5)

 

 

11,411

 

 

12,536

 

(9.0)

 

Employee benefits

 

 

1,299

 

 

983

 

32.1

 

 

3,621

 

 

3,204

 

13.0

 

Occupancy expense

 

 

697

 

 

646

 

7.9

 

 

2,056

 

 

1,973

 

4.2

 

Furniture and equipment expense

 

 

263

 

 

212

 

24.1

 

 

821

 

 

714

 

15.0

 

Data processing

 

 

972

 

 

930

 

4.5

 

 

2,801

 

 

2,487

 

12.6

 

Directors' fees

 

 

140

 

 

145

 

(3.4)

 

 

342

 

 

411

 

(16.8)

 

Amortization of intangible assets

 

 

144

 

 

270

 

(46.7)

 

 

461

 

 

597

 

(22.8)

 

FDIC insurance premium expense

 

 

 —

 

 

193

 

(100.0)

 

 

386

 

 

612

 

(36.9)

 

Other real estate owned expenses, net

 

 

133

 

 

166

 

(19.9)

 

 

426

 

 

125

 

240.8

 

Legal and professional fees

 

 

495

 

 

443

 

11.7

 

 

1,655

 

 

1,378

 

20.1

 

Other noninterest expenses

 

 

1,388

 

 

1,113

 

24.7

 

 

3,732

 

 

3,578

 

4.3

 

Total noninterest expense

 

 

9,384

 

 

9,310

 

0.8

 

 

27,712

 

 

27,615

 

0.4

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income from continuing operations before income taxes

 

 

5,625

 

 

5,795

 

(2.9)

 

 

16,481

 

 

15,981

 

3.1

 

Income tax expense

 

 

1,411

 

 

1,539

 

(8.3)

 

 

4,211

 

 

4,071

 

3.4

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income from continuing operations

 

 

4,214

 

 

4,256

 

(1.0)

 

 

12,270

 

 

11,910

 

3.0

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(Loss) income from discontinued operations before income taxes

 

 

(10)

 

 

269

 

(103.7)

 

 

(113)

 

 

1,317

 

(108.6)

 

Income tax (benefit) expense

 

 

(2)

 

 

71

 

(102.8)

 

 

(27)

 

 

324

 

(108.3)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(Loss) Income from discontinued operations

 

 

(8)

 

 

198

 

(104.0)

 

 

(86)

 

 

993

 

(108.7)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

NET INCOME

 

$

4,206

 

$

4,454

 

(5.6)

 

$

12,184

 

$

12,903

 

(5.6)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average shares outstanding - basic

 

 

12,764

 

 

12,748

 

0.1

 

 

12,771

 

 

12,736

 

0.3

 

Weighted average shares outstanding - diluted

 

 

12,769

 

 

12,761

 

0.1

 

 

12,776

 

 

12,749

 

0.2

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic net income per common share

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income from continuing operations

 

$

0.33

 

$

0.33

 

 —

 

$

0.96

 

$

0.93

 

3.2

 

(Loss) Income from discontinued operations

 

 

 —

 

 

0.02

 

(100.0)

 

 

(0.01)

 

 

0.08

 

(112.5)

 

Net income

 

$

0.33

 

$

0.35

 

(5.7)

 

$

0.95

 

$

1.01

 

(5.9)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted net income per common share

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income from continuing operations

 

$

0.33

 

$

0.33

 

 -

 

$

0.96

 

$

0.93

 

3.2

 

(Loss) Income from discontinued operations

 

 

 —

 

 

0.02

 

(100.0)

 

 

(0.01)

 

 

0.08

 

(112.5)

 

Net income

 

$

0.33

 

$

0.35

 

(5.7)

 

$

0.95

 

$

1.01

 

(5.9)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Dividends paid per common share

 

 

0.10

 

 

0.08

 

25.0

 

 

0.30

 

 

0.23

 

30.4

 

 

 

 

Page 10 of 17

Shore Bancshares, Inc.

Consolidated Average Balance Sheets

(Dollars in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the Three Months Ended

 

For the Nine Months Ended

 

 

 

September 30, 

 

September 30, 

 

 

 

2019

 

2018

 

2019

 

2018

 

 

 

Average

 

Yield/

 

Average

 

Yield/

 

Average

 

Yield/

 

Average

 

Yield/

 

 

    

balance

    

rate

    

balance

    

rate

    

balance

    

rate

    

balance

    

rate

 

Earning assets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loans (1), (2), (3)

 

$

1,235,374

 

4.54

%

$

1,174,513

 

4.47

%

$

1,219,623

 

4.55

%

$

1,140,925

 

4.45

%

Investment securities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Taxable

 

 

155,324

 

2.24

 

 

178,572

 

2.12

 

 

160,035

 

2.30

 

 

186,936

 

2.10

 

Interest-bearing deposits

 

 

41,554

 

2.13

 

 

17,488

 

1.91

 

 

29,279

 

2.28

 

 

13,542

 

1.80

 

Total earning assets

 

 

1,432,252

 

4.22

%

 

1,370,573

 

4.13

%

 

1,408,937

 

4.24

%

 

1,341,403

 

4.10

%

Cash and due from banks

 

 

18,127

 

 

 

 

17,790

 

 

 

 

17,520

 

 

 

 

17,031

 

 

 

Other assets

 

 

73,823

 

 

 

 

79,065

 

 

 

 

64,775

 

 

 

 

78,243

 

 

 

Allowance for credit losses

 

 

(10,412)

 

 

 

 

(10,354)

 

 

 

 

(10,419)

 

 

 

 

(10,173)

 

 

 

Total assets

 

$

1,513,790

 

 

 

$

1,457,074

 

 

 

$

1,480,813

 

 

 

$

1,426,504

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest-bearing liabilities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Demand deposits

 

$

252,386

 

0.70

%

$

221,905

 

0.32

%

$

242,364

 

0.66

%

$

214,317

 

0.26

%

Money market and savings deposits

 

 

389,268

 

0.67

 

 

373,357

 

0.14

 

 

386,113

 

0.79

 

 

378,404

 

0.13

 

Brokered deposits

 

 

14,568

 

2.29

 

 

25,507

 

2.01

 

 

19,144

 

2.40

 

 

12,157

 

2.09

 

Certificates of deposit $100,000 or more

 

 

119,200

 

1.78

 

 

97,563

 

0.69

 

 

108,504

 

1.54

 

 

98,772

 

0.58

 

Other time deposits

 

 

149,708

 

1.49

 

 

145,130

 

0.57

 

 

145,381

 

1.28

 

 

148,107

 

0.50

 

Interest-bearing deposits

 

 

925,130

 

0.98

 

 

863,462

 

0.36

 

 

901,506

 

0.96

 

 

851,757

 

0.30

 

Short-term borrowings

 

 

17,729

 

2.64

 

 

87,925

 

2.09

 

 

24,034

 

2.64

 

 

78,945

 

1.95

 

Long-term borrowings

 

 

15,000

 

2.86

 

 

 —

 

 —

 

 

15,000

 

2.86

 

 

 —

 

 —

 

Total interest-bearing liabilities

 

 

957,859

 

1.04

%

 

951,387

 

0.52

%

 

940,540

 

1.03

%

 

930,702

 

0.44

%

Noninterest-bearing deposits

 

 

354,927

 

 

 

 

329,383

 

 

 

 

341,966

 

 

 

 

322,748

 

 

 

Accrued expenses and other liabilities

 

 

7,884

 

 

 

 

6,005

 

 

 

 

9,213

 

 

 

 

5,766

 

 

 

Stockholders' equity

 

 

193,120

 

 

 

 

170,299

 

 

 

 

189,094

 

 

 

 

167,288

 

 

 

Total liabilities and stockholders' equity

 

$

1,513,790

 

 

 

$

1,457,074

 

 

 

$

1,480,813

 

 

 

$

1,426,504

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net interest spread

 

 

 

 

3.18

%

 

 

 

3.61

%

 

 

 

3.21

%

 

 

 

3.66

%

Net interest margin

 

 

 

 

3.52

%

 

 

 

3.76

%

 

 

 

3.56

%

 

 

 

3.79

%

(1) All amounts are reported on a tax-equivalent basis computed using the statutory federal income tax rate of 21.0%, exclusive of the alternative minimum tax rate and nondeductible interest expense.

(2) Average loan balances include nonaccrual loans.

(3) Interest income on loans includes amortized loan fees, net of costs and accretion of discounts on acquired loans, which are included in the yield calculations.

Page 11 of 17

Shore Bancshares, Inc.

Financial Highlights By Quarter

(Dollars in thousands, except per share data)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

3rd Quarter

 

2nd Quarter

 

1st Quarter

 

4th Quarter

 

3rd Quarter

 

Q3 2019

 

Q3 2019

 

 

 

2019

 

2019

 

2019

 

2018

 

2018

 

compared to

 

compared to

 

 

    

Q3 2019

    

Q2 2019

    

Q1 2019

    

Q4 2018

    

Q3 2018

    

Q2 2019

    

Q3 2018

 

PROFITABILITY FOR THE PERIOD

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Taxable-equivalent net interest income

 

$

12,724

 

$

12,334

 

$

12,428

 

$

12,756

 

$

12,975

 

3.2

%

(1.9)

%

Less: Taxable-equivalent adjustment

 

 

44

 

 

41

 

 

34

 

 

30

 

 

28

 

7.3

 

57.1

 

Net interest income

 

 

12,680

 

 

12,293

 

 

12,394

 

 

12,726

 

 

12,947

 

3.1

 

(2.1)

 

Provision for credit losses

 

 

200

 

 

200

 

 

100

 

 

460

 

 

307

 

 —

 

(34.9)

 

Noninterest income

 

 

2,529

 

 

2,609

 

 

2,188

 

 

2,112

 

 

2,465

 

(3.1)

 

2.6

 

Noninterest expense

 

 

9,384

 

 

8,985

 

 

9,343

 

 

9,216

 

 

9,310

 

4.4

 

0.8

 

Income from continuing operations before income taxes

 

 

5,625

 

 

5,717

 

 

5,139

 

 

5,162

 

 

5,795

 

(1.6)

 

(2.9)

 

Income tax expense

 

 

1,411

 

 

1,489

 

 

1,311

 

 

1,309

 

 

1,539

 

(5.2)

 

(8.3)

 

Income from continuing operations

 

 

4,214

 

 

4,228

 

 

3,828

 

 

3,853

 

 

4,256

 

(0.3)

 

(1.0)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(Loss) Income from discontinued operations before income taxes

 

 

(10)

 

 

(4)

 

 

(99)

 

 
104

 

 
269

 

(150.0)

 

(103.7)

 

Gain on sale of insurance agency

 

 

 —

 

 

 —

 

 

 —

 

 
12,736

 

 

 —

 

 —

 

 —

 

Income tax expense (benefit)

 

 

(2)

 

 

 —

 

 

(25)

 

 
4,599

 

 
71

 

 —

 

(102.8)

 

(Loss) Income from discontinued operations 

 

 

(8)

 

 

(4)

 

 

(74)

 

 

8,241

 

 

198

 

(100.0)

 

(104.0)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income

 

$

4,206

 

$

4,224

 

$

3,754

 

$

12,094

 

$

4,454

 

(0.4)

 

(5.6)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

From Continuing Operations:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Return on average assets

 

 

1.10

%

 

1.16

%

 

1.06

%

 

1.04

%

 

1.16

%

(6)

bp

(6)

bp

Return on average equity

 

 

8.66

 

 

8.97

 

 

8.39

 

 

8.83

 

 

9.92

 

(31)

 

(126)

 

Return on average tangible equity (1)

 

 

9.90

 

 

10.31

 

 

9.72

 

 

11.34

 

 

12.77

 

(41)

 

(287)

 

Net interest margin

 

 

3.52

 

 

3.54

 

 

3.61

 

 

3.58

 

 

3.76

 

(2)

 

(24)

 

Efficiency ratio - GAAP

 

 

61.70

 

 

60.29

 

 

64.07

 

 

62.11

 

 

60.41

 

141

 

129

 

Efficiency ratio - Non-GAAP (1)

 

 

60.58

 

 

59.09

 

 

62.81

 

 

60.18

 

 

58.55

 

149

 

203

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

PER SHARE DATA

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic net income per common share

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income from continuing operations

 

$

0.33

 

$

0.33

 

$

0.30

 

$

0.30

 

$

0.33

 

 —

%

 —

%

(Loss) Income from discontinued operations

 

 

 —

 

 

 —

 

 

(0.01)

 

 

0.65

 

 

0.02

 

 —

 

(100.0)

 

Net income

 

$

0.33

 

$

0.33

 

$

0.29

 

$

0.95

 

$

0.35

 

 —

 

(5.7)

 

Diluted net income per common share

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income from continuing operations

 

$

0.33

 

$

0.33

 

$

0.30

 

$

0.30

 

$

0.33

 

 —

 

 —

 

(Loss) Income from discontinued operations

 

 

 —

 

 

 —

 

 

(0.01)

 

 

0.65

 

 

0.02

 

 —

 

(100.0)

 

Net income

 

$

0.33

 

$

0.33

 

$

0.29

 

$

0.95

 

$

0.35

 

 —

 

(5.7)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Dividends paid per common share

 

 

0.10

 

 

0.10

 

 

0.10

 

 

0.09

 

 

0.08

 

 —

 

25.0

 

Book value per common share at period end

 

 

15.22

 

 

14.97

 

 

14.64

 

 

14.37

 

 

13.45

 

1.7

 

13.2

 

Tangible book value per common share at period end (1)

 

 

13.66

 

 

13.40

 

 

13.06

 

 

12.77

 

 

10.96

 

1.9

 

24.6

 

Market value at period end

 

 

15.41

 

 

16.34

 

 

14.91

 

 

14.54

 

 

17.82

 

(5.7)

 

(13.5)

 

Market range:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

High

 

 

17.00

 

 

16.48

 

 

16.11

 

 

18.32

 

 

19.84

 

3.2

 

(14.3)

 

Low

 

 

14.90

 

 

14.84

 

 

14.00

 

 

12.95

 

 

16.63

 

0.4

 

(10.4)

 

 

Page 12 of 17

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

AVERAGE BALANCE SHEET DATA

    

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loans

 

$

1,235,374

    

$

1,221,215

    

$

1,201,913

    

$

1,189,504

    

$

1,174,513

    

1.2

%

5.2

%

Investment securities

 

 

155,324

 

 

159,878

 

 

165,009

 

 

177,700

 

 

178,572

 

(2.8)

 

(13.0)

 

Earning assets

 

 

1,432,252

 

 

1,399,418

 

 

1,394,728

 

 

1,385,368

 

 

1,370,573

 

2.3

 

4.5

 

Assets

 

 

1,513,790

 

 

1,468,093

 

 

1,460,291

 

 

1,463,839

 

 

1,457,074

 

3.1

 

3.9

 

Deposits

 

 

1,280,057

 

 

1,233,951

 

 

1,215,702

 

 

1,197,445

 

 

1,192,845

 

3.7

 

7.3

 

Stockholders' equity

 

 

193,120

 

 

189,101

 

 

184,972

 

 

173,214

 

 

170,299

 

2.1

 

13.4

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

CREDIT QUALITY DATA

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net charge-offs

 

$

67

 

$

313

 

$

25

 

$

445

 

$

100

 

(78.6)

%

(33.0)

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Nonaccrual loans

 

$

12,530

 

$

14,592

 

$

15,360

 

$

16,655

 

$

7,362

 

(14.1)

 

70.2

 

Loans 90 days past due and still accruing

 

 

712

 

 

439

 

 

47

 

 

139

 

 

 3

 

62.2

 

23,633.3

 

Other real estate owned

 

 

74

 

 

524

 

 

979

 

 

1,222

 

 

1,518

 

(85.9)

 

(95.1)

 

Total nonperforming assets

 

$

13,316

 

$

15,555

 

$

16,386

 

$

18,016

 

$

8,883

 

(14.4)

 

49.9

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accruing troubled debt restructurings (TDRs)

 

$

7,588

 

$

7,768

 

$

7,828

 

$

8,663

 

$

8,933

 

(2.3)

 

(15.1)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total nonperforming assets and accruing TDRs

 

$

20,904

 

$

23,323

 

$

24,214

 

$

26,679

 

$

17,816

 

(10.4)

 

17.3

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

CAPITAL AND CREDIT QUALITY RATIOS

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Period-end equity to assets

 

 

12.42

%

 

12.85

%

 

12.59

%

 

12.35

%

 

11.63

%

(43)

bp

79

bp

Period-end tangible equity to tangible assets (1)

 

 

11.29

 

 

11.66

 

 

11.39

 

 

11.13

 

 

9.69

 

(37)

 

160

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Annualized net charge-offs to average loans

 

 

0.02

 

 

0.10

 

 

0.01

 

 

0.15

 

 

0.03

 

(8)

 

(1)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Allowance for credit losses as a percent of:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Period-end loans

 

 

0.85

 

 

0.83

 

 

0.86

 

 

0.87

 

 

0.87

 

 2

 

(2)

 

Nonaccrual loans

 

 

83.30

 

 

70.62

 

 

67.83

 

 

62.10

 

 

140.29

 

1,268

 

(5,699)

 

Nonperforming assets

 

 

78.39

 

 

66.25

 

 

63.58

 

 

57.41

 

 

116.27

 

1,214

 

(3,788)

 

Accruing TDRs

 

 

137.56

 

 

132.66

 

 

133.09

 

 

119.39

 

 

115.62

 

490

 

2,194

 

Nonperforming assets and accruing TDRs

 

 

49.93

 

 

44.18

 

 

43.02

 

 

38.77

 

 

57.97

 

575

 

(804)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

As a percent of total loans:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Nonaccrual loans

 

 

1.01

 

 

1.18

 

 

1.27

 

 

1.39

 

 

0.62

 

(17)

 

39

 

Accruing TDRs

 

 

0.61

 

 

0.63

 

 

0.65

 

 

0.72

 

 

0.76

 

(2)

 

(15)

 

Nonaccrual loans and accruing TDRs

 

 

1.63

 

 

1.80

 

 

1.91

 

 

2.12

 

 

1.38

 

(17)

 

25

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

As a percent of total loans+other real estate owned:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Nonperforming assets

 

 

1.08

 

 

1.25

 

 

1.35

 

 

1.51

 

 

0.75

 

(17)

 

33

 

Nonperforming assets and accruing TDRs

 

 

1.69

 

 

1.88

 

 

2.00

 

 

2.23

 

 

1.51

 

(19)

 

18

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

As a percent of total assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Nonaccrual loans

 

 

0.80

 

 

0.98

 

 

1.03

 

 

1.12

 

 

0.50

 

(18)

 

30

 

Nonperforming assets

 

 

0.85

 

 

1.04

 

 

1.10

 

 

1.21

 

 

0.60

 

(19)

 

25

 

Accruing TDRs

 

 

0.49

 

 

0.52

 

 

0.53

 

 

0.58

 

 

0.61

 

(3)

 

(12)

 

Nonperforming assets and accruing TDRs

 

 

1.34

 

 

1.56

 

 

1.63

 

 

1.80

 

 

1.21

 

(22)

 

13

 

(1)

See the reconciliation table on page 17 of 17.

Page 13 of 17

Shore Bancshares, Inc.

Consolidated Statements of Income By Quarter

(In thousands, except per share data)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Q3 2019

 

Q3 2019

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

compared to

 

compared to

 

 

    

Q3 2019

    

Q2 2019

    

Q1 2019

    

Q4 2018

    

Q3 2018

    

Q2 2019

    

Q3 2018

 

INTEREST INCOME

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest and fees on loans

 

$

14,100

 

$

13,749

 

$

13,499

 

$

13,452

 

$

13,205

 

2.6

%

6.8

%

Interest on investment securities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Taxable

 

 

870

 

 

887

 

 

998

 

 

1,339

 

 

947

 

(1.9)

 

(8.1)

 

Interest on deposits with other banks

 

 

223

 

 

113

 

 

163

 

 

103

 

 

84

 

97.3

 

165.5

 

Total interest income

 

 

15,193

 

 

14,749

 

 

14,660

 

 

14,894

 

 

14,236

 

3.0

 

6.7

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

INTEREST EXPENSE

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest on deposits

 

 

2,288

 

 

2,204

 

 

1,947

 

 

1,577

 

 

826

 

3.8

 

177.0

 

Interest on short-term borrowings

 

 

117

 

 

145

 

 

213

 

 

486

 

 

463

 

(19.3)

 

(74.7)

 

Interest on long-term borrowings

 

 

108

 

 

107

 

 

106

 

 

105

 

 

 —

 

0.9

 

 —

 

Total interest expense

 

 

2,513

 

 

2,456

 

 

2,266

 

 

2,168

 

 

1,289

 

2.3

 

95.0

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

NET INTEREST INCOME

 

 

12,680

 

 

12,293

 

 

12,394

 

 

12,726

 

 

12,947

 

3.1

 

(2.1)

 

Provision for credit losses

 

 

200

 

 

200

 

 

100

 

 

460

 

 

307

 

 —

 

(34.9)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

NET INTEREST INCOME AFTER PROVISION

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

FOR CREDIT LOSSES

 

 

12,480

 

 

12,093

 

 

12,294

 

 

12,266

 

 

12,640

 

3.2

 

(1.3)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

NONINTEREST INCOME

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Service charges on deposit accounts

 

 

990

 

 

1,028

 

 

934

 

 

1,045

 

 

982

 

(3.7)

 

0.8

 

Trust and investment fee income

 

 

383

 

 

385

 

 

372

 

 

360

 

 

383

 

(0.5)

 

 —

 

Other noninterest income

 

 

1,156

 

 

1,196

 

 

882

 

 

707

 

 

1,100

 

(3.3)

 

5.1

 

Total noninterest income

 

 

2,529

 

 

2,609

 

 

2,188

 

 

2,112

 

 

2,465

 

(3.1)

 

2.6

 

 

Page 14 of 17

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

NONINTEREST EXPENSE

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Salaries and wages

 

 

3,853

 

 

3,792

 

 

3,766

 

 

3,999

 

 

4,209

 

1.6

 

(8.5)

 

Employee benefits

 

 

1,299

 

 

1,068

 

 

1,254

 

 

797

 

 

983

 

21.6

 

32.1

 

Occupancy expense

 

 

697

 

 

668

 

 

691

 

 

649

 

 

646

 

4.3

 

7.9

 

Furniture and equipment expense

 

 

263

 

 

295

 

 

263

 

 

236

 

 

212

 

(10.8)

 

24.1

 

Data processing

 

 

972

 

 

919

 

 

910

 

 

844

 

 

930

 

5.8

 

4.5

 

Directors' fees

 

 

140

 

 

116

 

 

86

 

 

145

 

 

145

 

20.7

 

(3.4)

 

Amortization of intangible assets

 

 

144

 

 

155

 

 

162

 

 

269

 

 

270

 

(7.1)

 

(46.7)

 

FDIC insurance premium expense

 

 

 —

 

 

181

 

 

205

 

 

159

 

 

193

 

(100.0)

 

(100.0)

 

Other real estate owned expenses, net

 

 

133

 

 

60

 

 

233

 

 

228

 

 

166

 

121.7

 

(19.9)

 

Legal and professional fees

 

 

495

 

 

559

 

 

601

 

 

603

 

 

443

 

(11.4)

 

11.7

 

Other noninterest expenses

 

 

1,388

 

 

1,172

 

 

1,172

 

 

1,287

 

 

1,113

 

18.4

 

24.7

 

Total noninterest expense

 

 

9,384

 

 

8,985

 

 

9,343

 

 

9,216

 

 

9,310

 

4.4

 

0.8

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income from continuing operations before income taxes

 

 

5,625

 

 

5,717

 

 

5,139

 

 

5,162

 

 

5,795

 

(1.6)

 

(2.9)

 

Income tax expense

 

 

1,411

 

 

1,489

 

 

1,311

 

 

1,309

 

 

1,539

 

(5.2)

 

(8.3)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income from continuing operations

 

 

4,214

 

 

4,228

 

 

3,828

 

 

3,853

 

 

4,256

 

(0.3)

 

(1.0)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(Loss) Income from discontinued operations before income taxes

 

 

(10)

 

 

(4)

 

 

(99)

 

 

104

 

 

269

 

(150.0)

 

(103.7)

 

Gain on sale of insurance agency

 

 

 —

 

 

 —

 

 

 —

 

 

12,736

 

 

 —

 

 —

 

 —

 

(Loss) Income tax expense (benefit)

 

 

(2)

 

 

 —

 

 

(25)

 

 

4,599

 

 

71

 

 —

 

(102.8)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(Loss) Income from discontinued operations

 

 

(8)

 

 

(4)

 

 

(74)

 

 

8,241

 

 

198

 

(100.0)

 

(104.0)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

NET INCOME

 

$

4,206

 

$

4,224

 

$

3,754

 

$

12,094

 

$

4,454

 

(0.4)

 

(5.6)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average shares outstanding - basic

 

 

12,764

 

 

12,779

 

 

12,769

 

 

12,749

 

 

12,748

 

(0.1)

 

0.1

 

Weighted average shares outstanding - diluted

 

 

12,769

 

 

12,784

 

 

12,773

 

 

12,766

 

 

12,761

 

(0.1)

 

0.1

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic net income per common share

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income from continuing operations

 

$

0.33

 

$

0.33

 

$

0.30

 

$

0.30

 

$

0.33

 

 —

 

 —

 

(Loss) Income from discontinued operations

 

 

 —

 

 

 —

 

 

(0.01)

 

 

0.65

 

 

0.02

 

 —

 

(100.0)

 

Net income

 

$

0.33

 

$

0.33

 

$

0.29

 

$

0.95

 

$

0.35

 

 —

 

(5.7)

 

Diluted net income per common share

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income from continuing operations

 

$

0.33

 

$

0.33

 

$

0.30

 

$

0.30

 

$

0.33

 

 —

 

 —

 

(Loss) Income from discontinued operations

 

 

 —

 

 

 —

 

 

(0.01)

 

 

0.65

 

 

0.02

 

 —

 

(100.0)

 

Net income

 

$

0.33

 

$

0.33

 

$

0.29

 

$

0.95

 

$

0.35

 

 —

 

(5.7)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Dividends paid per common share

 

 

0.10

 

 

0.10

 

 

0.10

 

 

0.09

 

 

0.08

 

 —

 

25.0

 

 

 

 

Page 15 of 17

Shore Bancshares, Inc.

Consolidated Average Balance Sheets By Quarter

(Dollars in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Average balance

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Q3 2019

 

Q3 2019

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

compared to

 

compared to

 

 

 

Q3 2019

 

Q2 2019

 

Q1 2019

 

Q4 2018

 

Q3 2018

 

Q2 2019

 

Q3 2018

 

 

 

Average

 

Yield/

 

Average

 

Yield/

 

Average

 

Yield/

 

Average

 

Yield/

 

Average

 

Yield/

 

 

 

 

 

 

    

balance

    

rate

    

balance

    

rate

    

balance

    

rate

    

balance

    

rate

    

balance

    

rate

 

 

 

 

 

Earning assets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loans (1), (2), (3)

 

 

1,235,374

 

4.54

%

$

1,221,215

 

4.53

%

$

1,201,913

 

4.57

%

$

1,189,504

 

4.50

%

$

1,174,513

 

4.47

%

1.2

%

5.2

%

Investment securities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Taxable

 

 

155,324

 

2.24

 

 

159,878

 

2.22

 

 

165,009

 

2.45

 

 

177,700

 

2.46

 

 

178,572

 

2.12

 

(2.8)

 

(13.0)

 

Interest-bearing deposits

 

 

41,554

 

2.13

 

 

18,325

 

2.47

 

 

27,806

 

2.38

 

 

18,164

 

2.25

 

 

17,488

 

1.91

 

126.8

 

137.6

 

Total earning assets

 

 

1,432,252

 

4.22

%

 

1,399,418

 

4.24

%

 

1,394,728

 

4.27

%

 

1,385,368

 

4.20

%

 

1,370,573

 

4.13

%

2.3

 

4.5

 

Cash and due from banks

 

 

18,127

 

 

 

 

17,225

 

 

 

 

17,196

 

 

 

 

18,204

 

 

 

 

17,790

 

 

 

5.2

 

1.9

 

Other assets

 

 

73,823

 

 

 

 

61,906

 

 

 

 

58,756

 

 

 

 

70,858

 

 

 

 

79,065

 

 

 

19.3

 

(6.6)

 

Allowance for credit losses

 

 

(10,412)

 

 

 

 

(10,456)

 

 

 

 

(10,389)

 

 

 

 

(10,591)

 

 

 

 

(10,354)

 

 

 

(0.4)

 

0.6

 

Total assets

 

$

1,513,790

 

 

 

$

1,468,093

 

 

 

$

1,460,291

 

 

 

$

1,463,839

 

 

 

$

1,457,074

 

 

 

3.1

 

3.9

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest-bearing liabilities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Demand deposits

 

$

252,386

 

0.70

%

$

234,775

 

0.65

%

$

239,794

 

0.61

%

$

218,519

 

0.53

%

$

221,905

 

0.32

%

7.5

 

13.7

 

Money market and savings deposits

 

 

389,268

 

0.67

 

 

385,272

 

0.84

 

 

383,738

 

0.85

 

 

378,163

 

0.68

 

 

373,357

 

0.14

 

1.0

 

4.3

 

Brokered deposits

 

 

14,568

 

2.29

 

 

20,866

 

2.52

 

 

22,080

 

2.37

 

 

22,816

 

2.17

 

 

25,507

 

2.01

 

(30.2)

 

(42.9)

 

Certificates of deposit $100,000 or more

 

 

119,200

 

1.78

 

 

107,549

 

1.54

 

 

98,535

 

1.24

 

 

97,023

 

0.94

 

 

97,563

 

0.69

 

10.8

 

22.2

 

Other time deposits

 

 

149,708

 

1.49

 

 

145,900

 

1.31

 

 

140,523

 

1.02

 

 

141,702

 

0.80

 

 

145,130

 

0.57

 

2.6

 

3.2

 

Interest-bearing deposits

 

 

925,130

 

0.98

 

 

894,362

 

0.99

 

 

884,670

 

0.89

 

 

858,223

 

0.73

 

 

863,462

 

0.36

 

3.4

 

7.1

 

Short-term borrowings

 

 

17,729

 

2.64

 

 

21,557

 

2.70

 

 

32,984

 

2.62

 

 

72,462

 

2.66

 

 

87,925

 

2.09

 

(17.8)

 

(79.8)

 

Long-term borrowings

 

 

15,000

 

2.86

 

 

15,000

 

2.86

 

 

15,000

 

2.87

 

 

14,348

 

2.89

 

 

 —

 

 —

 

 —

 

 —

 

Total interest-bearing liabilities

 

 

957,859

 

1.04

%

 

930,919

 

1.06

%

 

932,654

 

0.99

%

 

945,033

 

0.91

%

 

951,387

 

0.52

%

2.9

 

0.7

 

Noninterest-bearing deposits

 

 

354,927

 

 

 

 

339,589

 

 

 

 

331,032

 

 

 

 

339,222

 

 

 

 

329,383

 

 

 

4.5

 

7.8

 

Accrued expenses and other liabilities

 

 

7,884

 

 

 

 

8,484

 

 

 

 

11,633

 

 

 

 

6,370

 

 

 

 

6,005

 

 

 

(7.1)

 

31.3

 

Stockholders' equity

 

 

193,120

 

 

 

 

189,101

 

 

 

 

184,972

 

 

 

 

173,214

 

 

 

 

170,299

 

 

 

2.1

 

13.4

 

Total liabilities and stockholders' equity

 

$

1,513,790

 

 

 

$

1,468,093

 

 

 

$

1,460,291

 

 

 

$

1,463,839

 

 

 

$

1,457,074

 

 

 

3.1

 

3.9

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net interest spread

 

 

 

 

3.18

%

 

 

 

3.18

%

 

 

 

3.28

%

 

 

 

3.29

%

 

 

 

3.61

%

 

 

 

 

Net interest margin

 

 

 

 

3.52

%

 

 

 

3.54

%

 

 

 

3.61

%

 

 

 

3.58

%

 

 

 

3.76

%

 

 

 

 

(1) All amounts are reported on a tax-equivalent basis computed using the statutory federal income tax rate of 21.0%, exclusive of the alternative minimum tax rate and nondeductible interest expense.

(2) Average loan balances include nonaccrual loans.

(3) Interest income on loans includes amortized loan fees, net of costs and accretion of discounts on acquired loans, which are included in the yield calculations.

Page 16 of 17

Shore Bancshares, Inc.

Reconciliation of Generally Accepted Accounting Principles (GAAP)

and Non-GAAP Measures

(In thousands, except per share data)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

YTD

 

YTD

 

 

    

Q3 2019

    

Q2 2019

    

Q1 2019

    

Q4 2018

    

Q3 2018

    

9/30/2019

    

9/30/2018

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

The following reconciles return on average equity and return on average tangible equity from continuing operations (Note 1):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income from continuing operations

 

$

4,214

 

$

4,228

 

$

3,828

 

$

3,853

 

$

4,256

 

$

12,270

 

$

11,910

 

Net income from continuing operations - annualized (A)

 

$

16,719

 

$

16,958

 

$

15,525

 

$

15,286

 

$

16,885

 

$

16,405

 

$

15,924

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income, excluding net amortization of intangible assets

 

$

4,321

 

$

4,344

 

$

3,949

 

$

4,054

 

$

4,457

 

$

12,614

 

$

12,382

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income, excluding net amortization of intangible assets - annualized (B)

 

$

17,143

 

$

17,424

 

$

16,015

 

$

16,084

 

$

17,683

 

$

16,865

 

$

16,555

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Average stockholders' equity (C)

 

$

193,120

 

$

189,101

 

$

184,972

 

$

173,214

 

$

170,299

 

$

189,094

 

$

167,288

 

Less:  Average goodwill and other intangible assets

 

 

(19,991)

 

 

(20,138)

 

 

(20,281)

 

 

(31,410)

 

 

(31,810)

 

 

(20,136)

 

 

(32,203)

 

Average tangible equity (D)

 

$

173,129

 

$

168,963

 

$

164,691

 

$

141,804

 

$

138,489

 

$

168,958

 

$

135,085

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Return on average equity (GAAP)  (A)/(C)

 

 

8.66

%

 

8.97

%

 

8.39

%

 

8.83

%

 

9.91

%

 

8.68

%

 

9.52

%

Return on average tangible equity (Non-GAAP)  (B)/(D)

 

 

9.90

%

 

10.31

%

 

9.72

%

 

11.34

%

 

12.77

%

 

9.98

%

 

12.26

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

The following reconciles GAAP efficiency ratio and non-GAAP efficiency ratio from continuing operations (Note 2):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Noninterest expense (E)

 

$

9,384

 

$

8,985

 

$

9,343

 

$

9,216

 

$

9,310

 

$

27,712

 

$

27,615

 

Less:  Amortization of intangible assets

 

 

(144)

 

 

(155)

 

 

(162)

 

 

(269)

 

 

(270)

 

 

(461)

 

 

(631)

 

Adjusted noninterest expense (F)

 

$

9,240

 

$

8,830

 

$

9,181

 

$

8,947

 

$

9,040

 

$

27,251

 

$

26,984

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net interest income (G)

 

 

12,680

 

 

12,293

 

 

12,394

 

 

12,726

 

 

12,947

 

 

37,367

 

 

37,909

 

Add:  Taxable-equivalent adjustment

 

 

44

 

 

41

 

 

34

 

 

30

 

 

28

 

 

119

 

 

84

 

Taxable-equivalent net interest income (H)

 

$

12,724

 

$

12,334

 

$

12,428

 

$

12,756

 

$

12,975

 

$

37,486

 

$

37,993

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Noninterest income (I)

 

$

2,529

 

$

2,609

 

$

2,188

 

$

2,112

 

$

2,465

 

$

7,326

 

 

6,901

 

Adjusted noninterest income (J)

 

$

2,529

 

$

2,609

 

$

2,188

 

$

2,112

 

$

2,465

 

$

7,326

 

$

6,901

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Efficiency ratio (GAAP)  (E)/(G)+(I)

 

 

61.70

%

 

60.29

%

 

64.07

%

 

62.11

%

 

60.41

%

 

62.01

%

 

61.63

%

Efficiency ratio (Non-GAAP)  (F)/(H)+(J)

 

 

60.58

%

 

59.09

%

 

62.81

%

 

60.18

%

 

58.55

%

 

60.81

%

 

60.11

%

 

Page 17 of 17

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

The following reconciles book value per common share and tangible book value per common share (Note 1):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stockholders' equity (L)

 

$

193,963

 

$

191,307

 

$

187,082

 

$

183,185

 

$

171,419

 

 

 

 

 

 

 

Less:  Goodwill and other intangible assets

 

 

(19,914)

 

 

(20,058)

 

 

(20,214)

 

 

(20,383)

 

 

(31,706)

 

 

 

 

 

 

 

Tangible equity (M)

 

$

174,049

 

$

171,249

 

$

166,868

 

$

162,802

 

$

139,713

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Shares outstanding (N)

 

 

12,742

 

 

12,780

 

 

12,780

 

 

12,749

 

 

12,748

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Book value per common share (GAAP)  (L)/(N)

 

$

15.22

 

$

14.97

 

$

14.64

 

$

14.37

 

$

13.45

 

 

 

 

 

 

 

Tangible book value per common share (Non-GAAP) (M)/(N)

 

$

13.66

 

$

13.40

 

$

13.06

 

$

12.77

 

$

10.96

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

The following reconciles equity to assets and tangible equity to tangible assets (Note 1):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stockholders' equity (O)

 

$

193,963

 

$

191,307

 

$

187,082

 

$

183,185

 

$

171,419

 

 

 

 

 

 

 

Less:  Goodwill and other intangible assets

 

 

(19,914)

 

 

(20,058)

 

 

(20,214)

 

 

(20,383)

 

 

(31,706)

 

 

 

 

 

 

 

Tangible equity (P)

 

$

174,049

 

$

171,249

 

$

166,868

 

$

162,802

 

$

139,713

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Assets (Q)

 

$

1,561,679

 

$

1,488,562

 

$

1,485,799

 

$

1,483,076

 

$

1,473,543

 

 

 

 

 

 

 

Less:  Goodwill and other intangible assets

 

 

(19,914)

 

 

(20,058)

 

 

(20,214)

 

 

(20,383)

 

 

(31,706)

 

 

 

 

 

 

 

Tangible assets (R)

 

$

1,541,765

 

$

1,468,504

 

$

1,465,585

 

$

1,462,693

 

$

1,441,837

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Period-end equity/assets (GAAP)  (O)/(Q)

 

 

12.42

%

 

12.85

%

 

12.59

%

 

12.35

%

 

11.63

%

 

 

 

 

 

 

Period-end tangible equity/tangible assets (Non-GAAP)  (P)/(R)

 

 

11.29

%

 

11.66

%

 

11.39

%

 

11.13

%

 

9.69

%

 

 

 

 

 

 

Note 1: Management believes that reporting tangible equity and tangible assets more closely approximates the adequacy of capital for regulatory purposes.

 

Note 2: Management believes that reporting the non-GAAP efficiency ratio more closely measures its effectiveness of controlling cash-based operating activities.